PAT Scheme : In 2008 Indian Govt. announced an innovative market based trading scheme under its National Mission on Enhanced Energy Efficiency (NMEEE) in National Action Plan on Climate Change (NAPCC). The aim was to improve energy efficiency in energy-intensive sectors by trading in energy efficiency certificates.
The PAT scheme is being designed and implemented by the Bureau of Energy Efficiency (BEE), under the Ministry of Power of India. A newly established company Energy Efficiency Services Ltd (EESL) is administering the trading. The 2010 amendment to the Energy Conservation Act (ECA) provides a legal mandate to PAT.
PAT is a market based mechanism in which sectors are assigned efficiency targets. Industries which over-achieve will get incentives in the form of energy saving certificates. These certificates are tradeable and can be bought by other industries which are unable to achieve their targets. These certificates will be tradeable at two energy exchanges: Indian Energy Exchange and Power Exchange India. The price of these certificates will be determined by the market.
Under the penalty clause, if an industry fails to achieve its target, it will be penalized. The penalty will be calculated on the basis of the what remains to be achieved to meet target. This figure is multiplied by the cost of energy today (roughly ₹ 10,154 per tonne of oil). “As each industry will be competing against itself only, it will have its energy consumption in 2010 as its baseline data, to improve upon.
Participation in the scheme is mandatory for Designated Consumers under the ECA. It is being administered by the BEE that sets mandatory, specific targets for energy consumption for larger, energy-intensive facilities. The PAT Scheme is being implemented in three phases- the first phase runs from 2012-2015. and second is now running from 2015-2018 covering more than 500 facilities from eight energy-intensive sectors, namely aluminium, cement, chor-alkali, fertilizer, iron and steel, pulp and paper, textiles and thermal power plants.
This accounts for roughly 62% of India’s total primary energy consumption.
PAT Scheme approach is as follows-
- Specification of specific energy consumption (SEC) norm for each designated consumer in the baseline year and in the target year (*2);
- Verification of the SEC of each designated consumer in the baseline year and in the target year by an accredited verification agency;
- Issuance of Energy Savings Certificates (ESCerts) to those designated consumers who exceed their target SEC reduction;
- Trading of ESCerts with designated consumers who are unable to meet their target SEC reduction after three years;
- Checking of compliance, and reconciliation of ESCerts at the end of the 3-year period. In case of non-compliance, a financial penalty is due.
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