The Ministry of New and Renewable Energy has introduced the Energy Conservation (Amendment) Bill in Rajya Sabha.

Highlights of the Bill

• The Bill amends the Energy Conservation Act, 2001 to empower the central government to specify a carbon credit trading scheme.
• Designated consumers may be required to meet a proportion of their energy needs from non-fossil sources.

Why was this Bill introduced?

• During the COP-26 summit in 2021, India made commitments relevant for energy efficiency efforts.
• Against this backdrop, the Energy Conservation (Amendment) Bill, 2022 was introduced in Lok Sabha in August 2022.

Key features of the bill

• Carbon credit trading:The Bill empowers the central government to specify a carbon credit trading scheme.   Carbon credit implies a tradable permit to produce a specified amount of carbon dioxide or other greenhouse emissions.
• Obligation to use non-fossil sources of energy:The Act empowers the central government to specify energy consumption standards for designated consumers to meet a minimum share of energy consumption from non-fossil sources.  Designated consumers include: (i) industries such as mining, steel, cement, textile, chemicals, and petrochemicals, (ii) transport sector including Railways, and (iii) commercial buildings, as specified in the schedule.
• Energy conservation code for buildings: The bill empowers the central government to specify norms for energy efficiency and conservation, use of renewable energy, and other requirements for green buildings.   Under the Act, the energy conservation code applies to commercial buildings: (i) erected after the notification of the Code, and (ii) having a minimum connected load of 100 kilowatt (kW) or contract load of 120 kilo volt ampere (kVA).
• Standards for vehicles and vessels: Under the bill, the energy consumption standards may be specified for equipment and appliances which consume, generate, transmit, or supply energy.  The Bill expands the scope to include vehicles (as defined under the Motor Vehicles Act, 1988), and vessels (includes ships and boats).
• Composition of the governing council of BEE: The Act provides for the setting up of the Bureau of Energy Efficiency (BEE).  The Bureau has a governing council with members between 20 and 26 in number.

Concerns raised

• Carbon credit trading aims to reduce carbon emissions, and hence, address climate change.  The question is whether the Ministry of Power is the appropriate Ministry to regulate this scheme.
• A further question is whether the market regulator for carbon credit trading should be specified in the Act.
• Same activity may be eligible for renewable energy, energy savings, and carbon credit certificates.
• The Bill does not specify whether these certificates will be interchangeable.
• Designated consumers must meet certain non-fossil energy use obligation.  Given the limited competition among discoms in any area, consumers may not have a choice in the energy mix.

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