Energy Conservation (Amendment) Bill

In Context

Recently, the Lok Sabha passed the Energy Conservation (Amendment) Bill, 2022.
- The Bill seeks to amend the Energy Conservation Act, 2001.

More about the news

The Energy Conservation Act, 2001 promotes energy efficiency and conservation.
- It provides for the regulation of energy consumption by equipment, appliances, buildings, and industries.
Key provisions of the Energy Conservation (Amendment) Bill:
- The bill seeks to mandate the use of non-fossil sources, including Green hydrogen, green ammonia, biomass, and Ethanol for energy and feedstock;

Establish Carbon Markets;
Bring large residential buildings within the fold of the Energy Conservation regime;
Enhance the scope of the Energy Conservation Building Code;
Amend penalty provisions;
Increase members in the governing council of the Bureau of Energy Efficiency (BEE);
Empower the State Electricity Regulatory Commissions to make regulations for smooth discharge of its functions
To put in place enabling provisions to make the use of clean energy, including green hydrogen, mandatory and to establish carbon markets.

Significance

Climate Change & Paris Agreement:
- Climate change has become a reality and governments across the world are making stronger commitments towards climate action to avert the crisis.
- India made a commitment as a part of the Paris Agreement, which is a legally binding international treaty on climate change.
- Updated NDCs:
  - According to the recently updated Nationally Determined Contribution (NDC),
    - India now aims to reduce emissions intensity of its GDP by 45 percent by 2030 from 2005 levels, and
    - Source 50 percent of electricity from non-fossil sources.
  - The new Bill is in line with the country’s commitments and will act as a facilitator for achieving the targets.
Carbon Market:
- The Bill empowers the central government to specify a carbon credit trading scheme.
- The proposed amendments aim to encourage the development of a carbon market by laying the framework for issuance of carbon credits against deployment of clean technology.
  - Investment in clean technology will help corporations in greening their business profiles and the attached carbon credits will provide an additional revenue stream.
- Hence, the proposed amendments seek to address a prominent gap in the climate change narrative with respect to involvement of the private sector.

Carbon Credits

A carbon credit is a permit that allows the company that holds it to emit a certain amount of CO2 or other greenhouse gases.
One credit permits the emission of a mass equal to one tonne of carbon dioxide.
These were devised as a market-oriented mechanism to reduce greenhouse gas emissions.
Companies get a set number of credits, which decline over time.
They can sell any excess to another company.

Way ahead

India needs to align public financial flows with announced targets on energy transition, to leverage private finance. This includes
- Shifting subsidies to clean energy,
- Mandating SOE (state-owned enterprises) investments in clean energy and Increasing targets on public finance for clean energy.
With an upcoming COP and a G20 summit in India next year, these actions can strengthen India’s negotiating power, especially around climate finance from the global north.

About Paris Agreement:

It is a legally binding international treaty on climate change.
It replaced the Kyoto Protocol, an earlier agreement to deal with climate change.
It is a landmark agreement as it brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, for the first time.
It was adopted by 196 Parties at COP 21 in Paris, in December 2015 and entered into force in November 2016.
Nationally Determined Contributions (NDCs):
- To achieve the targets under the agreement, the member countries have to submit the targets themselves, which they believe would lead to substantial progress towards reaching the Paris temperature goal.
  - Initially, these targets are called Intended Nationally Determined Contributions (INDCs).
  - They are converted to NDCs when the country ratifies the agreement.

Panchamrit strategy:

‘Panchamrit’ strategy was announced at the COP 26 in Glasgow conference into enhanced climate targets.
- India will increase its non-fossil fuel energy capacity to 500 gigawatt (GW) by 2030.
- It will meet 50 percent of its energy requirements from renewable sources by 2030.
- The total projected carbon emissions will be reduced by 1 billion tonnes from now through 2030.
- The carbon intensity of its economy will be brought down to less than 45 percent.
- India will achieve its target of net zero by 2070.

Source: TH

Previous article NITI Aayog’s Governing Council Meeting

Next article Him Drone-a-thon’ programme