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Industries will pay for low energy efficiency

In a new measure to check emissions responsible for global warming, the government has notified a domestic carbon trade mechanism that will impose penalties on industries failing to achieve new energy efficiency targets.

delhi Updated: Apr 03, 2012 01:49 IST
Chetan Chauhan

In a new measure to check emissions responsible for global warming, the government has notified a domestic carbon trade mechanism that will impose penalties on industries failing to achieve new energy efficiency targets.

New rules notified for eight energy-intensive sectors will allow the government to impose a penalty of over Rs 10,000 for missing the target by 1 tonne of oil-equivalent. It means that if a company falls short by 5 tonnes of oil-equivalent, it will have to pay a penalty of over Rs 50,000 to the government.

There is also an incentive for companies that surpass the energy-efficiency target set for 2014-15. For each extra tonne of oil-equivalent saved, the company will get an energy saving certificate. These certificates can be sold through a market mechanism to companies that fail to meet the target. http://www.hindustantimes.com/Images/Popup/2012/4/03_04_pg-13a.jpg

Bureau for Energy Efficiency (BEE) director general Ajay Mathur told HT that the scheme would enable the Indian industry to “progressively” reduce its carbon intensity, strengthening its bottom line as well. “In a way, the production cost for each tonne will reduce,” he said.

Among the world’s first domestic carbon emission trading mechanisms, this scheme — known as Perform Achieve Trade (PAT) — has been implemented under the National Mission for Energy Efficiency Enhancement. It is a part of the Prime Minister’s National Action Plan on Climate Change.

The power ministry on Friday notified the rules under the Energy Conservation Act-2011, aimed at reducing 6.6 million tonnes of oil-equivalent by 2015, or 4% of the energy consumed by these industries in 2009-10. As the bureau wanted to target energy-intense industries, eight sectors — iron and steel, cement, fertilisers, aluminum, pulp and paper, chloralkali, textiles and thermal power stations — were included.

Accounting for one-third of India’s total energy consumption, these sectors cover 478 industrial units whose energy consumption for producing a tonne of end-product is higher than the standard specified by BEE. They include some of India’s top companies, such as Reliance, Vedanta Aluminum Limited and Gujarat Fluorochemicals Limited.