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Last Updated : May 30, 2011 10:53 AM IST | Source: Reuters

India's new trading schemes to curb carbon emissions

India is taking a different path to curb its emissions, betting big on two market-based trading schemes to encourage energy efficiency and green power.


India is taking a different path to curb its emissions, betting big on two market-based trading schemes to encourage energy efficiency and green power.


Following are some details about the Renewable Energy Certificate (RECs) and Perform, Achieve and Trade (PAT) schemes, seen as India's latest move to promote clean energy.



Renewable energy certificates


- The programme, which began in February, allows clean energy producers to trade in Renewable Energy Certificates (REC).


- RECs can be bought by companies to meet statutory obligations to purchase a minimum level of renewable energy. One REC represents one megawatt-hour of energy generated from renewable sources, such as wind, solar or biomass, and remains valid for a year.


- A renewable energy producer will have two mutually exclusive options to sell electricity - either sell at a preferential tariff, or at normal rates and use the sale of RECs to help recoup investment costs.


- RECs are meant to be traded in power exchanges in two categories - solar and non-solar. Most of the traded projects under the scheme relate to wind power, although more solar power plants are expected to come on line because of government incentives.


- The price band for solar certificates has been fixed at USD 264-374 per MW/h, and the band for wind and biomass certificates ranges USD 33-86 per unit.


- On May 25, REC trading volumes rose to 14,002, valued at USD 4.6 million, on the Indian Energy Exchange, against volume of 260 units at the previous session in April. Trading currently occurs on one day a month.


- Major participants in during the May session included Reliance Energy Trading Ltd, Tata Power, Manikaran Power, Shree Cement and Knowledge Infrastructure Systems Private Ltd.


- Trade estimate puts the market size for RECs at Rs 5,250 crore (USD 1.2 billion).


- In the absence of a National Renewable Purchase Obligation (RPO), RECs operate within rules crafted by states. Out of 28 states, only 21 states have such obligations, which varies from 2% to 14% of green power.



Perform, achieve and trade


- PAT is a market-based mechanism aimed at improving energy efficiency levels in large polluting industries in eight sectors. They are aluminium, cement, chlor-alkali, fertiliser, iron and steel, pulp and paper, textiles and thermal power.


- About 563 polluting units come under the eight categories, accounting for about 54 percent of the country's energy consumption.


- Identified firms would have to achieve their energy consumption target by 2014 when trading is set to begin after a three-year roll-out period.


- The PAT market is estimated about USD 16 billion and will lead to reduction of about 100 million tonne of greenhouse gas emissions.


- The tradeable energy saving certificates are called Escerts and these are based on a target reduction from the baseline. The number of Escerts issued depends upon the amount of energy saved during a target year.


- The state-run Bureau of Energy Efficiency is setting up the overall framework for the scheme and Energy Efficiency Services Limited (EESL) will work as an implementation and monitoring agency.

- The programme, originally supposed to take off in April, has been delayed as the government and industry struggle to identify targets for firms.

First Published on May 30, 2011 10:50 am
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