Energy Conservation Bill 2022 introduced in Rajya Sabha

In order to address the transition from fossil fuel to non-fossil fuel capacity in India, the Energy Conservation (Amendment) Bill, 2022 has been introduced in Rajya Sabha.

Key Highlights of the Bill:

• The Bill amends the Energy Conservation Act, of 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.
• The Energy Conservation Code for buildings will also apply to office and residential buildings with a connected load of 100 kilowatts or above.
• Energy consumption standards may be specified for vehicles and ships.

Need for the Bill:

• For Action against Climate change: Efforts towards energy conservation and efficiency gains are among the key instruments envisaged for climate change mitigation.  
• To reduces, greenhouse gas emissions: Efforts on these fronts lower the energy generation requirement, and thereby reduce greenhouse gas emissions.

Key Features:

• Carbon credit trading: The Bill empowers the central government to specify a carbon credit trading scheme.  
  • Carbon credit implies a tradeable permit to produce a specified amount of carbon dioxide or other greenhouse emissions.
  • The central government or any authorised agency may issue carbon credit certificates to entities registered and compliant with the scheme.
• Obligation to use non-fossil sources of energy: The Act 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.
  • 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 Act empowers the central government to specify Energy Conservation Code for buildings.  
  • The code prescribes energy consumption standards in terms of area.
  • The Bill amends this to provide for an ‘Energy Conservation and Sustainable Building Code’.
• Standards for vehicles and vessels:
  • Under the Act, 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 (including ships and boats).
• Composition of the governing council of BEE: The Act provides for the setting up of the Bureau of Energy Efficiency (BEE).
• These include:

(i) Secretaries of six departments,

(ii) Representatives of regulatory authorities such as the Central Electricity Authority, the Bureau of Indian Standards, and

(iii) Up to four members representing industries and consumers.  

Key Issues:

• Lack of proper classification: The Ministry of Power does not have the expertise to regulate carbon trading schemes. 
• Lack of Inclusion of market regulators: A further question is whether the market regulator for carbon credit trading should be specified in the Act.
• The flexibility of carbon certificates: The Bill does not specify whether these certificates will be interchangeable.
• Fails to address stakeholders’ needs: Designated consumers must meet certain non-fossil energy use obligations.  Given the limited competition among discoms in any area, consumers may not have a choice in the energy mix.