Abhishek Pandey
What would be a better way to welcome this year’s Energy Conservation Day than Passing of the Energy Conservation (Amendment) Bill 2022 by Rajya Sabha. India, which is the world’s 5th largest economy, is expected to become the 3rd largest by 2022 and in the process, it is natural that India will need and consume energy in gigantic proportions. The energy consumption is going to increase at a rapid pace as the economy grows.
India which is, the 3rd largest oil consumer and imports approx 20% of coal requirement, will have to shell out more from the coffer if the energy supplies must be secured. The volatile geopolitical factors add to the stress on energy security as well as on the finances. Hence it is imperative that we shift our energy consumption pattern as well as our energy portfolio. It goes without saying that India has been working on this front.
The GoI’s push for Renewables, Green Hydrogen, and Electric Vehicles (EVs) is unprecedented and matches with the focus on Energy Conservation.
The amendment to the Act has been termed as “Futuristic” and provides for a wonderful opportunity to India to achieve Net-Zero much ahead of the target year of 2070.
Now, the Energy Conservation (Amendment) Act 2022 puts the Bureau of Energy Efficiency (BEE) on the driving seat for creating a market-based mechanism for ensuring that our energy conservation and sustainability targets are met. Transitioning to efficient lighting, cooling, heating, and other energy-efficient appliances is led by the BEE.
The Amendment brings “appliances, vehicles, vessels, industrial units, buildings or establishments” under the ambit of BEE and now BEE also has an opportunity to set standards for EVs.
To promote adoption of EVs, the Government could adopt a two-pronged strategy for reducing oil dependence. One, the adoption of small EVs like Cars and Bikes for short-distance travel within cities; and two, the conversion of long-haul heavy transport vehicles to more energy-efficient technologies.
Right set of policies could increase the pace of the adoption of EVs across the country. Standardization of batteries and battery packs, battery swapping norms, interoperability of charging interfaces, and setting up of a dense network of charging points/battery swapping points will go a long way in the adoption of EVs by masses and replacement of fossil-fuel guzzling cars and bikes.
For long-haul transport vehicles, Govt could focus on Hydrogen powered technology. With the increased focus on Green Hydrogen, which is produced from Renewable Energy, India could leverage its expertise in Solar and Wind energy for reducing dependencies on crude oil.
The amendment added sub-clause (x) to section 14 which enables specifying minimum share of consumption of non-fossil fuels by designated consumers thus creating a strong impetus for weaning away from fossil fuels and transitioning to cleaner energy sources.
The amendment also has provisions for Carbon Credit Trading Scheme which will help in setting up a market-based ecosystem that focusses on the reduction, replacement, and removal of carbon from the entire energy value chain. Currently, Indian stakeholders are guided by the International Carbon markets, however, with the establishment of a domestically focused setup, India would be able to monitor, measure, and report its contribution more precisely towards fulfilling its commitments under the United Nations Framework Convention on Climate Change (UNFCCC).
The provisions for Carbon Credit Trading also allows the Government of India to relook at and evaluate other similar mechanisms which are operational in India and incorporate the learnings while setting up the Carbon market. Currently, India has a Renewable Energy Certificate (REC) market and PAT mechanism.
Both markets faced some challenges in terms of monitoring and compliance. The REC market is primarily driven by Renewable Purchase Obligation (RPO) imposed by the State Electricity Regulatory Commissions (SERCs). Each state has a nodal agency (such as SLDC or Renewable Development agency) for monitoring the compliance level.
The entire mechanism faced delays in reporting or non-reporting of actual consumption of power and consumption of renewable power. Even when the reporting was done, SERCs were lenient on non-compliant DISCOMs and Consumers. In the absence of a credible deterrence, the demand for RECs plummeted thus creating a glut of REC in the market which put many renewable projects at financial risk.
This learning needs to be internalized and used while designing a viable Carbon market. The right combination of incentives and deterrence could spur healthy demand in the carbon markets thus increasing the pace of adoption of Low-Carbon No-Carbon technologies in the energy value change.
Implementing the provision of this Act in letter and spirit will not only result in economic benefits but also demonstrate the intent and resolve of India to fulfill its commitments to move to greener sources of energy and inspire energy thought leadership as it advances to become a global energy leader.
The author is GM – Trading & BD, Amp Energy India
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