The Energy Conservation (Amendment) Bill, 2022

Syllabus: General Studies Paper 3

The Act promotes energy efficiency and conservation. It provides for the regulation of energy consumption by equipment, appliances, buildings, and industries.

Key proposals under the Bill are:

• Obligation to use non-fossil sources of energy: The Act empowers the central government to specify energy consumption standards. 
• Carbon Trading:  The Bill empowers the central government to specify a carbon credit trading scheme. 

Carbon Markets

• Carbon markets allow the trade of carbon credits with the overall objective of bringing down emissions.
• These markets create incentives to reduce emissions or improve energy efficiency.
• For example, an industrial unit which outperforms the emission standards stands to gain credits.
• Another unit which is struggling to attain the prescribed standards can buy these credits and show compliance to these standards.
• The unit that did better on the standards earns money by selling credits, while the buying unit is able to fulfill its operating obligations.
• Under the Kyoto Protocol, the predecessor to the Paris Agreement, carbon markets have worked at the international level as well.
• As the world negotiated a new climate treaty in place of the Kyoto Protocol, the developed countries no longer felt the need to adhere to their targets under the Kyoto Protocol.
• A similar carbon market is envisaged to work under the successor Paris Agreement, but its details are still being worked out.

Carbon Credit 

It implies a tradeable permit to produce a specified amount of carbon emissions.  

• The central government or any authorised agency may issue carbon credit certificates to entities registered under and compliant with the scheme.   
• The entities will be entitled to purchase or sell the certificate.  
• Any other person may also purchase a carbon credit certificate on a voluntary basis.
• 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 amend this to provide for an ‘energy conservation and sustainable building code’. 
• Applicability to Residential Buildings:  Under the Act, the energy conservation code applies to commercial buildings: 

• Erected after the notification of the code
• Having a minimum connected load of 100 kilo watts (kW) or contract load of 120 kilo volt ampere (kVA).  
• Standards for Vehicles and Vessels:  Under the Act, 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). 
• Regulatory Powers of SERCs: The Act empowers the State Electricity Regulatory Commissions (SERCs) to adjudge penalties under the Act.  The Bill adds that SERCs may also make regulations for discharging their functions.
• 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.   These include: (i) secretaries of six departments, (ii) representatives of regulatory authorities such as the Central Electricity Authority, and the Bureau of Indian Standards, and (iii) up to four members representing industries and consumers.  The Bill instead provides that the number of members will be between 31 and 37.  It increases the number of secretaries to 12.   It also provides for up to seven members representing industries and consumers.