India Walks the Green Talk

Energy Conservation (Amendment) Bill, 2022

EN EXPLAINS

Energy transition is defined as "a change in the primary form of energy consumption of a given society". In India, the framework for energy transition is governed by the country's commitment under the Nationally Determined Contributions (NDCs) submitted to the United Nations Framework Convention on Climate Change (UNFCCC). In this context, the Ministry of Environment, Forest and Climate Change (MOEF&CC) has submitted to the UNFCCC secretariat a framework document "India's LongTerm Low-Carbon Development Strategy" which has the elements of Long-Term Low-Emissions Development Strategies including rational utilization of fossil fuel resources, with due regard to energy security, expanding renewables & strengthening the grid, etc. With an objective to support the energy transition, the Energy Conservation (Amendment) Bill, 2022 has been passed by the Rajya Sabha in the current session of the Parliament. The Bill was previously passed by the Lok Sabha in August 2022.

What Necessitated the Amendment?: The Energy Conservation (Amendment) Bill, 2022 amends the Energy Conservation Act, 2001, which was enacted to provide for the efficient use of energy and its conservation. The 2001 Act provides for establishment and incorporation of the Bureau of Energy Efficiency (BEE) and confers certain powers upon the Central Government, the State Government and the BEE to enforce measures for efficient use of energy and its conservation. The Energy Conservation Act, 2001 was amended in the year 2010 to address various new factors which emerged with the development of the energy market over a period of time and to provide for more efficient and effective use of energy. With the passage of time, and in the context of energy transition with special focus on promotion of new and renewable energy and National Green Hydrogen Mission, a need was felt to further amend the Act. The Energy Conservation (Amendment) Bill, 2022 will facilitate the achievement of 'Panchamrit' - as five nectar elements presented by India in COP-26 (Conference of Parties - 26) in Glasgow in 2021. The Bill is said to promote renewable energy and the development of the domestic Carbon market to combat climate change. To achieve the same, new concepts such as Carbon trading and mandatory use of non-fossil sources have been introduced. These will help ensure faster decarbonization of Indian economy and help in achieving Sustainable Development Goals (SDGs) in line with the Paris Agreement and various other actions related to climate change. To encourage investments in clean energy and energy efficiency areas by the private sector, a legal framework for a Carbon market with the objective of incentivizing actions for emission-reduction was also deemed necessary.

Another need that was felt in India's transition to climate action was to have legal provisions to prescribe minimum consumption of non-fossil energy sources as energy or feedstock by the designated consumers. Such provisions can help in reduction of fossil fuel-based energy consumption and resultant Carbon emissions to the atmosphere.

What is the New Bill About?: The Energy Conservation (Amendment) Bill, 2022 promotes energy efficiency and conservation. The Bill shall:

(a)    Mandate use of non-fossil sources, including Green Hydrogen, Green Ammonia, Biomass and Ethanol for energy and feedstock;

(b)   establish Carbon Markets;

(c)    bring large residential buildings within the fold of Energy Conservation regime;

(d)   enhance the scope of Energy Conservation Building Code;

(e)    amend penalty provisions;

(f)    increase members in the Governing Council of Bureau of Energy Efficiency; and

(g)    empower the State Electricity Regulatory Commissions to make regulations for smooth discharge

a)      Carbon Credit Trading Scheme: 'Carbon Credit' refers to a tradeable permit allowing the holder to emit a specified amount of carbon dioxide or other greenhouse gasses, such as methane and nitrous oxide. A Carbon Credit can be earned by reducing emissions for a given activity or creating sinks for carbon absorption. Carbon credits may be purchased by an entity that emits above its specified amount. The Carbon Credit Trading Scheme, included in the new Bill, is aimed at reducing greenhouse gas emissions, and hence addressing climate change. The Central Government or any authorized agency may issue Carbon Credit certificates to entities registered and compliant with the scheme. The entities will be entitled to trade the certificates.

b)      Usage of Non-fossil Sources of Energy: The Energy Conservation (Amendment) Bill, 2022 empowers the Central Government to specify energy consumption standards. The Bill adds that the Government may require 'designated consumers' to meet a minimum share of energy consumption from non-fossil sources. Different consumption thresholds may be specified for different nonfossil sources and consumer categories. 'Designated consumers' include industries such as mining, steel, cement, textile, chemicals, and petrochemicals; transport sector, including Railways; and commercial buildings, as specified in the Schedule. Failure to meet this obligation will be punishable with a penalty of up to Rs 10 lakhs. It will also attract an additional penalty of up to twice the price of oil equivalent to energy consumed above the prescribed norm

c)      Green Buildings: The 2001 Act empowers the Central Government to specify Energy Conservation Code for buildings, which prescribes energy consumption standards in terms of area. The current Energy Conservation Building Code (ECBC) sets minimum energy standards for commercial buildings having a connected load of 100kW or contract demand of 120 KVA and above. The Bill amends this to provide for an 'Energy Conservation and Sustainable Building Code'. ECBC essentially means "the norms and standards of energy consumption expressed in terms of per squaremetre of the area wherein energy is used and includes the location of the building".

The Energy Conservation and Sustainable Building Code will provide norms for energy efficiency and conservation, the use of renewable energy, and other requirements for green buildings. A 'green building' means the one which ensures optimum utilization of natural resources and generates less waste as compared to a conventional building. Green buildings are expected to reduce energy and water consumption and also eliminate waste through recycling and reuse. The new code will also apply to the office and residential buildings, in addition to the commercial buildings. The Bill empowers the State Governments to lower the load thresholds.

d)      Standards for Vehicles & Vessels: Under the 2001 Act, the energy consumption standards may be specified for equipment and appliances which consume, generate, transmit, or supply energy. The Energy Conservation (Amendment) Bill, 2022 expands the scope to include vehicles (as defined under the Motor Vehicles Act, 1988) and vessels (includes ships and boats). The failure to comply with standards will be punishable with a penalty of up to Rs. 10 lakhs. Non-compliance, in the case of vessels, will attract an additional penalty of up to twice the price of oil equivalent to energy consumed above the prescribed norm. Vehicle manufacturers in violation of fuel consumption norms will be liable to pay a penalty of up to Rs 50,000 per unit of vehicles sold.

Compiled by: Anuja Bhardwajan & Annesha Banerjee Source: AIR/PBNS/Lok Sabha