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With a view to foster energy conservation, boosting the carbon trading market in India, and to strive toward energy efficiency, the Energy Conservation (Amendment) Bill 2022 (hereinafter referred to as “the Bill”), was introduced in Parliament on August 3, 2022; later passed by the Lok Sabha on August 08, 2022. The bill aims to augment the usage of non-fossil resources of energy for power generation in India, in line with the recent targets (nationally determined contributions) set by India per the Paris Climate Agreement. Under the said Agreement,
- By 2030, India aims to escalate its green energy to 500 GW.
- It intends to shift 50 percent of its energy requirements to renewable energy sources.
- The carbon emission percentage is aimed to be reduced by 45% or less.
- By 2030 from now, the net carbon intensities are expected to decrease by 1 Bn tonnes.
- India aims to achieve its Net Zero target by 2070.
In light of its global commitments and domestic energy requirements, the Indian government has proposed certain amendments to the already existing “Energy Conservation Act, 2001”. The key provisions of the bill have been discussed in the subsequent portion.
The salient changes proposed in The Energy Conservation Bill 2022 are:
- Shift towards non-fossil fuel consumption and penalties: To mandate the use of non-fossil energy resources precisely for commercial buildings, transport systems, and industries. In case of failure to adhere, the respective firm will have to pay a penalty of Rs. 10 lakh. In case of any non-compliance with the prescribed energy consumption standards regarding any vessel or industrial unit, an additional penalty not exceeding twice the price of every metric ton of oil equivalent consumed over and above the prescribed norms will also be charged. So far, only the large-scale industries and their affiliated buildings have been covered under the Bill as of now.
- Carbon Trading: The bill empowers the Central Government to speculate in the carbon trading market. Carbon markets are trading systems in which carbon credits are sold and bought. The Government or any authorized body can issue the carbon credit certificate to the entities that are required to adhere to the mandated compliances under the Bill regarding the usage of non-fossil fuels. The respective entities may further buy or sell the certificates per the carbon credit trading scheme.
- Energy Conservation Code: Under this Bill, residential buildings are required to adhere to and adopt an energy conservation code. The Energy Conservation code establishes minimum requirements for energy-efficient design and construction of buildings.
- Vehicle and Vessels: Under this, the energy consumption standard may be specified for equipment and appliances of vehicles and vessels in terms of energy consumption. In case of failure to comply with the norms, the penalty of Rs 10 lakh is to be paid.
- Regulatory powers: The bill grants regulatory powers to the State Regulatory Electricity Commissions (SREC). As an electricity regulator at the state level, it decides the retail taxes for the consumers, ensures the quality of services for the industries, and checks upon the intrastate power transmission.
- Reforms in the constitution of the governing council: Updating the existing number of members in the governing council of the Bureau of Energy Efficiency (BEE). The Bureau of Energy Efficiency is a statutory body under the Ministry of Power that works toward energy efficiency in India. The bill has increased the number of council members from 20-26 to 31-37 and the number of secretaries to 12.
Impacts and Implications of Energy Conservation Bill
The bill provides many benefits to India’s environment and economy. The green and clean energy supply in India would minimize the dependency on imported fossil fuels, thus saving valuable foreign exchange. With the establishment of new clean energy projects, there would be a rise in job opportunities. As the world starts to witness the shift from fossil resources to non-fossil resources, it would likely result in the rise of opportunities in the sector of clean and renewable resources focusing on storage technology and power generation.
The bill specifically focuses on the industrial sector, as the first two mandates mentioned above aim to make Indian industries energy efficient by using non-fossil sources. A few industries in India already practice sustainable ways for industrial growth. The bill hence encourages and mandates Indian industries to use non-fossil sources to promote clean energy and reduce carbon emissions.
Some big industries are already working on shifting to renewable energy resources. The respective industries voluntarily adopted the targets to cut down carbon emissions and use substitute renewable resources. The Bill provides an opportunity for big players in the industry to set higher targets that can be achieved. With the ease to achieve targets, demand for renewable sources of energy would shoot up. The government must ensure to carry out good research about the challenges to be faced such as storage technologies for renewable energies. The bill talks about India’s carbon market scheme, which is a great initiative and opportunity to get an edge over other nations and to make India’s carbon certificate valuable.
The bill takes into consideration the possibility of using renewable energies such as green ammonia and green hydrogen to bring down carbon emissions. The prices of renewable resources are yet not financially feasible for all, hence they need to be lowered to make them viable for all. To benefit from this bill, the Government should practice a price control mechanism to keep a check on the prices of renewable resources to encourage all industrial sectors. The respective Bill is introduced to increase the demand for renewable energy, thus expanding the scope of manufacturing, transport, and industries set up in India.
Overall, The Energy Conservation Bill is a great initiative proposed by the lawmakers of India. It is intended to make India, a green and clean country by minimizing carbon emissions and thereby turn the country into a magnet for economic opportunities. This Bill promotes sustainable development as it aims to increase the demand for renewable resources, which eventually would bring down India’s carbon emissions.