In a crucial step towards setting up carbon markets in the country, the Rajya Sabha passed the Energy Conservation (Amendment) Bill 2022.
Key Points On Energy Conservation (Amendment) Bill 2022
- The present Amendment Bill seeks amendment to the Energy Conservation Act, 2001.
- The Bill aims to increase energy efficiency and proposes a carbon credit trading system through which major power consumers will have to ensure that part of their energy requirements are met with renewable energy sources.
- The bill which has been passed in Lok Sabha in August already, mandates the use of non-fossil sources, including green hydrogen, green ammonia, biomass and ethanol, for energy and feedstock.
- While terming the Bill “futuristic” and “advanced over the rest of the world”, Minister of Power RK Singh said that India is moving relentlessly towards achieving its climate goals by 2030.
Background of Energy Conservation (Amendment) Bill 2022
- In order to keep global warming within 2°C, global greenhouse gas (GHG) emissions need to be reduced by 25 to 50% by 2030.
- Nearly 170 countries have submitted their nationally determined contributions (NDCs are targeting to achieve net-zero emissions) under the 2015 Paris Agreement, which have to be updated every 5 years.
- In order to meet their NDCs, one mitigation strategy is becoming popular with several countries – carbon markets. The Paris Agreement provides for the use of international carbon markets (yet to kick off) by countries to fulfil their NDCs.
- In the past, developing countries, particularly India, China and Brazil, gained significantly from a similar carbon market under the Clean Development Mechanism (CDM) of the Kyoto Protocol, 1997.
The Energy Conservation Act, 2001
- The Energy Conservation Act, 2001 provided a framework for regulating energy consumption and promoting energy efficiency and energy conservation.
- The Act set up the Bureau of Energy Efficiency (BEE) which recommends regulations and standards for energy consumption in appliances, vehicles, and commercial establishments.
- These regulations do help in reducing greenhouse gas emissions by lowering the energy generation requirements but it’s not enough to meet the NDC targets
Energy Conservation (Amendment) Bill 2022
Carbon Credit And Carbon Trading Market
Who Comes Under The New Amendment?
- Emission limits and consumption thresholds for different non-fossil sources and consumer categories may be specified when the law is enacted.
- Although the bill includes industries such as mining, steel, cement, textile, chemicals, and petrochemicals, and the transport sector including Railways, some commercial buildings as designated consumers.
- For them, failure to meet this obligation will be punishable with a penalty of up to Rs 10 lakh.
- It will also attract an additional penalty of up to twice the price of oil equivalent of energy consumed above the prescribed limits.
Energy Consumption Standards For Residential Buildings And Vehicles
- The new amendment gives the government additional power to make an ‘Energy Conservation and Sustainable Building Code’ for residential and commercial buildings.
- It will apply to residential and commercial buildings erected after the notification of the Code, and having a minimum connected load of 100 kilowatts (kW) or contract load of 120-kilo volt-ampere (kVA).
- The state government will have the power to lower the load thresholds.
- The bill also gives authorities power to make energy consumption standards for vehicles and vessels like ships and boats.
- Failure to comply with standards will be punishable with a penalty of up to Rs 10 lakh and in the case of vessels an additional penalty of up to twice the price of oil equivalent of energy consumed above the prescribed norm.
- If vehicle manufacturers are in violation of norms, they will be liable to pay a penalty of up to Rs 50,000 per unit of vehicles sold.
Why This Bill Is Important?
- While India’s per capita emissions and historic emissions are both very low, they are expected to increase as India grows economically.
- Thus, it is important that India creates a mechanism in advance that balances limiting carbon emissions with necessary economic activity.
- India has already committed to reducing the carbon intensity of its economy by 45 per cent by 2030, as part of its “Panchamrit” Goals stated by PM Modi at the COP-26 in Glasgow last year.
- It also includes India reducing total projected carbon emissions by 1 billion tonnes from now to 2030 and net zero emissions by 2070.
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