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The Bureau of Energy Efficiency (BEE) has commenced final round of consultations with the industry before the impending roll-out of the proposed Perform, Achieve and Trade (PAT) scheme from April 1.
BEE has been conducting extensive deliberations with industry segments on the new scheme, which aims at the use of energy-saving certifications to spur efficiency improvement across energy-intensive units on a nation-wide basis.
Given targets
Under the proposed scheme, 563 units across eight sectors — including some of NTPC's coal-fired super thermal plants, Tata Steel's Jamshedpur plant, Hindalco's Belgaum and Raigad aluminium units, ITC's Bhadrachalam paper unit, RIL's Naroda and Patalganga textile units, ACC's Chaibasa cement unit, Balco's aluminium plant in Korba, Grasim Industries' Nagda unit and IFFCO's Paradip unit — will all be given targets to reduce their energy consumption.
The units that manage to better their targets will be allowed to sell energy-saving credits to those failing to achieve the required cuts, with trading slated to take place on the two operational Power Exchanges.
“We will be starting the last round of consultations with the industry today… at the CEO level and down to the plant level for each of the designated consumers,” the Director-General of the Bureau of Energy Efficiency (BEE), Dr Ajay Mathur, said here at an industry conference.
Energy Saving Certificates
The upfront issue of Energy Saving Certificates to designated consumers, corresponding to their energy reduction targets, is being considered by the BEE as an early price discovery measure and to ensure sufficient liquidity to spur trading.
Key mechanism
The scheme is a key mechanism under the National Mission on Enhanced Energy Efficiency. “The Energy Savings Certificates (ESCerts) issued under the scheme can be traded by the unit on special platforms on the power exchanges and the prices would be market driven... trading would take about six months to one year from the date of start (April 1, 2011),” Dr Mathur said.
The Specific Energy Consumption (SEC) reduction targets for the energy-intensive units would be compiled on a “gate-to-gate” approach, with targets being non-negotiable. Since there is a large bandwidth in specific energy consumption in all sectors, the unit-specific targets would be a percentage reduction of current SEC as a ratio of the best in that particular sector.
“It is not feasible to define a single norm or standard unless there is significant homogeneity among units in a sector. Energy efficiency improvement targets would have to be almost ‘unit specific'. Each designated consumer will be mandated to reduce its SEC by a fixed percentage over a three year time-frame, based on its current SEC within the sectoral bandwidth,” Dr Mathur said.
Financial penalties
The financial penalties for non-compliance have been hiked. Like in the case of emissions trading, the new scheme aims at maximising energy savings nationally, in the most cost-effective manner. The Government envisages a saving of around 10 million tonnes of oil equivalent in the energy consumption of the designated consumers.
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