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India's own emission reducing mechanism

The PAT mechanism for trading energy efficiency certificates, unique in the world, will be functional from April. A similar emission certificate trading system will be launched by end of this year. Chetan Chauhan reports.

delhi Updated: Jan 28, 2011 01:32 IST
Chetan Chauhan

Companies consuming less energy will now be able to sell the efficiency certificates to the non-efficient ones, domestically.

India's domestic energy efficiency trading system ---- Perform, Achieve and Trade (PAT) ----- similar to international Clean Development Mechanism of the United Nations will become operational from this April.

"The programme provides flexibility to take benefit under PAT as well as CDM," said Ajay Mathur, Director General of Bureau of Energy Efficiency, which will be running India's first programme. "A company which reduced its consumption of power can also register with the UN."

It is country's first trading mechanism aimed at reducing carbon dioxide emissions to fight climate change. As much as 10 million tonnes equivalent of oil would be saved in next three years.

The Ministry of Environment and Forest will soon launch the second ---Emission Trading Scheme (ETS). In this, the companies having high overall emissions will be able to buy emission certificate from the lesser polluting industries. "We have started online monitoring of few hundred industries in some cities in Gujarat and Tamil Nadu. Once we have the database the system will be launched," said S P Gautam, chairperson of the Central Pollution Control Board (CPCB), the projecting implementing body.

Mathur said the PAT mechanism is being introduced for eight polluting sectors such thermal power and almunium refineries with an aim to reduce their energy consumption by five percent in three years. It would mean that these sectors would recover their entire investment of about Rs 30,000 crore for adopting clean technology within a period of three years. "After that the saving would be the profit," he said.

Reducing energy consumption is mandatory for these sectors under the Energy Efficiency Act, 2001. The industries failing to meet the reduction target will have to pay a penalty of Rs 10 lakh plus the charge of excess they consume above the stipulated target. However, adopting PAT is voluntary.

The programme under National Mission for Enhanced Energy Efficiency (NMEEE), one of the eight action plans on Climate Change, will be market driven, rather than being controlled by the market. The BEE will set up two exchanges through which the energy efficiency certificates could be traded to escape the huge penalty.

The energy efficiency trading is expected to start from September this year by when designated energy auditors will conduct audit for the industries to prepare a baseline for the trading system to work. "It is one of the unique energy efficiency programme in the world," said Power Secretary P Uma Shankar.