Converting energy-efficiency savings into cash earnings

Written by fe Bureaus | Updated: Sep 1 2009, 04:50am hrs
Industry has welcomed the government nod to the energy-efficiency mission, but is closely watching to see how it is operationalised.

Seeking to create an energy efficiency market worth Rs 75,000 crore, the National Mission for Enhanced Energy Efficiency was approved by the Prime Ministers Council on Climate Change last week. Its one of the eight missions under the National Action Plan on Climate Change and will have a budgetary support of Rs 295 crore during the current plan period.

Indresh Batra, managing director, Jindal Saw said, The mission will enable us to not only become more energy efficient, but also fight climate change. Rajesh Menon, senior director, Energy, Environment & Natural Resources, CII added, The mission will help in bringing down greenhouse gas emissions significantly and make the industry more competitive.

Apart from creating an energy efficiency market, the mission aims to cut down the countrys annual energy usage by 5% by 2015, and carbon dioxide emissions by 100 million tonne every year. The goal of the mission is to reduce energy usage of 10,000 mw by 2012.

The mission provides for a Perform, Achieve and Trade (PAT) mechanism to set targets on energy efficiency improvement for energy-intensive industries and encourage trade of energy savings certificates. Called ESCerts, the certificates can be earned by industries which surpass their energy-efficiency targets. Industry consumes 42% of the energy and emits 31% of the carbon dioxide in the country.

Industry leaders are waiting for the mission document to be elaborated, said Ashutosh Pandey, CEO, Carbon Advisory Business, Emergent Ventures India, Its not yet clear how the benchmarking will be done. Similarly, the mission needs to have a timeframe, which goes beyond 2015. Added a spokesperson of a business chamber, who was involved in getting industry inputs for the draft document, We have to wait and watch to see how the energy efficiency trading mechanism is designed. The mission also lays down market mechanisms to enhance energy efficiency in industries, and encourage development of energy-efficient and affordable products and services. Two new funds will be created for the purpose. While the Partial Risk Guaranty Facility would offer guarantees to banks against disbursal of loans to energy-efficiency projects with perceived risks, a venture capital fund would finance manufacture of energy-efficient products and creation of energy-efficiency services.

Said Swapan Mehra, president, Carbon Markets, Evolutions Markets, an environmental and energy solutions company, The setting up of funds will go a long way in realising the goals of the mission. Lack of funding is one reason why the industry is not investing in energy efficiency as it should.

Besides, the mission also provides for setting up an energy service company to invest in buildings, municipalities and agricultural pump to make them energy-efficient. The company would get repaid over a period of time from accrued energy savings.

Said Russi Engineer, president, Urjavaran Foundation, an NGO, The laws, policies and mechanisms are already in place. Implementation is the key. Added Nitin Pandit, president, International Institute for Energy Conservation, Now the focus should be at the state level because the implementation will have to be done there.

The Prime Ministers council also appointed the Bureau of Energy Efficiency as the implementing agency. The bureau is already active in this area. It has launched an energy labeling programme for electrical appliances. It also runs the Bachat Lamp Yojna, which encourages households to switch over to CFLs. The bureau has also taken a lead in laying down policies and regulations. The Energy Conservation Building Code serves as a guide for energy management in buildings. Similarly, energy audits have been made mandatory in energy intensive industrial sectors.