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MC Explains | Proposed changes in Energy Conservation regulations: Why they are important for India

Here's an explainer on how both the Energy Conservation Amendment Bill and revised Nationally Determined Contribution towards climate change are aimed at achieving the country’s ambitious targets to work towards climate action.

August 08, 2022 / 02:53 PM IST

Union Minister of Power Raj Kumar Singh introduced the ‘The Energy Conservation (Amendment) Bill, 2022’ in the Lok Sabha, which aims to boost clean energy and help in achieving India’s commitments towards climate change. 

Separately, on August 3, the Union Cabinet chaired by the Prime Minister Narendra Modi approved India’s updated Nationally Determined Contribution (NDC) to be communicated to the United Nations Framework Convention on Climate Change (UNFCCC).

ALSO READ: India enhanced ambitions when world seeing less action on climate change: Experts

Both these actions by the government are aimed at achieving the country’s ambitious targets to work towards climate action. Here’s a quick explainer on what these policy actions are and how do we get affected:

India’s climate change commitments 

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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,  a legally binding international treaty on climate change, which was adopted in 2015. India had committed, among other things, three quantitative targets for upto 2030– increase installed capacity from non-fossil sources to reach 40 percent, reduce the emissions intensity of Gross Domestic Product (GDP) by 33 to 35 percent compared to 2005 levels, and creation of additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover.

Later, at the UN Climate Change Conference in Glasgow (COP26) in 2021, Prime Minister Narendra Modi raised these targets and the cabinet approved them on August 4. According to the updated 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.  

ALSO READ: Explained | What the Energy Conservation Bill aims to achieve

The new Bill is in line with the country’s commitments and will act as a facilitator for achieving the targets. 

Why the amendments to the Energy Conservation Act?

In 2001, India enacted the Energy Conservation Act, which had at its core efficient use of energy and its conservation. Subsequently, it was amended in 2010 to address various new factors which emerged with the development of the energy market. The new amendents hope to expand the scope of the policy and act as an enabler for the targets set by India.

With the 2022 amendments, the government hopes to support its stance of offering 'Panchamrit', or five nectar elements, as a part of the country’s commitment towards low-carbon development strategy. The so-called 'Panchamrit' includes India’s commitment to install 500 gigawatts (GW) of non-fossil energy capacity by 2030, reduce emission intensity of GDP by 45 percent over 2005 levels, source 50 percent of the electricity from non-fossil sources by 2030, reduce carbon emission by 1 billion tonnes till 2030 and achieve net-zero by 2070.

What will the amendments do?

The key objectives of the Energy Conservation (Amendment) Bill 2022, which was introduced in Lok Sabha on August 3 include: 

  1. mandate use of non-fossil sources, including green hydrogen, green ammonia, biomass and ethanol for energy and feedstock

  2. establish Carbon Markets

  3. bring large residential buildings within the fold of Energy Conservation regime

  4. enhance the scope of Energy Conservation Building Code

  5. amend penalty provisions

  6. increase members in the governing council of Bureau of Energy Efficiency

  7. empower the State Electricity Regulatory Commissions to make regulations for smooth discharge of its functions 

  8.  to put in place enabling provisions to make the use of clean energy, including green hydrogen, mandatory and to establish carbon markets.

Road ahead

The policy initiatives of the government met with positive response from experts; they highlighted that these measures cover all the important aspects of India’s journey towards meeting the climate change goals.   

Commenting on the bill, Sugandha Somani Gopal, partner at law firm JSA said, “The proposed amendments 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.”

But industry players await more granular details of the policy and believe that execution would be the key to its success. 

“We hope to see the NDC provide more detail on implementation pathways - in particular, goals 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,” said Balasubramanian Viswanathan, Policy Advisor, International Institute for Sustainable Development. 
Rachita Prasad heads Moneycontrol’s coverage of conventional and new energy, and infrastructure sectors. Rachita is passionate about energy transition and the global efforts against climate change, with special focus on India. Before joining Moneycontrol, she was an Assistant Editor at The Economic Times, where she wrote for the paper for over a decade and was a host on their podcast. Contact: rachita.prasad@nw18.com
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