Amended Energy Conservation Bill seeks to build carbon credit market

Will also embrace green fuels, industrial energy efficiency

In line with the climate commitments made by India at the 26th session of the Conference of the Parties, commonly called COP26, the Centre has introduced amendments to its the Energy Conservation Act, 2001, to meet the targets embracing green fuels, industrial energy efficiency, and build the country’s own carbon credit market.

The Energy Conservation (Amendment) Bill , 2022, text said the amendments have been proposed in the context of energy transition being planned by India with focus on promotion of renewable energy and the National Green Hydrogen Mission. It said the Bill will help meeting the five targets announced by Prime Minister Narendra Modi at COP26 in Glasgow in 2021.

Tabled in the Lok Sabha on Wednesday, the Bill proposes mandatory threshold for consumption of green fuels such as green hydrogen, green ammonia, and biomass in all industries.

“It is considered necessary to have legal provisions to prescribe minimum consumption of non-fossil energy sources as energy or feedstock by designated consumers. This will help in the reduction of fossil fuel-based energy consumption and resultant carbon emissions to the atmosphere,” said the proposal in the Bill.

The proposal to increase consumption of green fuels in the economy comes at a time when sector majors ranging to renewable energy companieshave announced their foray into green fuel manufacturing. 

Adani New Industries plans to invest over $50 billion (Rs 3.9 trillion) over the next 10 years in green hydrogen and the associated ecosystems and will develop a green hydrogen production capacity of 1 million tonne per annum before 2030.

RIL, which has forayed into the green energy and green fuel business last year, had announced earlier it would bring down the cost of green hydrogen to $1 per kilogram in under a decade.

To incentivise the private sector for emission reduction, the Centre also plans to bring in a legal framework for the country’s first-ever carbon trading market.

Globally, the carbon credit market collapsed in 2012 as prices plummeted, failing to revive again. Also, the developed nations stopped financing the ‘clean development mechanism’ under which the market was introduced.

The Union government in its proposal said a legal framework for a carbon market was needed to meet the objective of “incentivising actions for emission reduction, leading to increased investments in clean energy and energy efficiency areas by the private sector”.

RUB OF THE GREEN

• Carbon certificates to be introduced for trading
• Use of green fuels across industries to be mandated
• Scope of energy conservation building code widened to include large residential complexes
• Penalty provisions to include automotive sector as well
• Members increased in the governing council of Bureau of Energy Efficiency

A carbon credit trading scheme for reduction of carbon emissions will be launched and certificates issued to those who meet their emission targets. These certificates can then be traded with those unable to meet their emission targets.

The Bill has also amended the penalty provisions to include more sectors. While the penalty remains the same for those defaulting on energy conservation and auditing, automobiles have been added to the list.

Any automobile manufacturer who fails to comply with fuel consumption norms will be liable to pay additional penalty per unit of vehicles sold in the corresponding year.

The Bill has laid down a penalty of Rs 25,000 per vehicle for non-compliance of norms up to 0.2 litres per 100 kilometre (km); Rs 50,000 per vehicle for non-compliance of norms above 0.2 litres per 100 km. Any default over and above this will be penalised Rs 10 lakh per vehicle.

The ambit and scope of the energy conservation building code has been widened to include large residential complexes as well. The Centre will prescribe energy conservation building codes for efficient use of energy and its conservation in building complexes.

The Centre plans to amend the energy conservation building codes to suit regional and local climatic conditions, the Bill said. The central and state governments have been empowered under the Bill to direct the owner or occupier of a building to comply with the provisions of the energy conservation building code.

Cabinet approves climate targets under updated NDC

The Union Cabinet on Wednesday approved the targets set by the Centre to meet its climate change commitments under the Nationally Determined Contribution, which comprises voluntary proposed targets submitted to the United Nations Framework Convention on Climate Change.

India had last submitted its NDC in 2016. It will now be updated to meet the target announced by Prime Minister Narendra Modi at the 26th session of the Conference of the Parties (COP26) in Glasgow in 2021. He had announced India would be a net-zero carbon economy by 2070.

To meet this target, India will reduce emission intensity of its gross domestic production by 45 per cent by 2030, from the 2005 levels, and achieve about 50 per cent of cumulative electric power-installed capacity from non-fossil fuel-based energy resources by 2030.

It will also create an additional carbon sink of 2.5-3 billion tonnes of CO2 equivalent through additional forests and tree cover by 2030.