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India takes different path to lower carbon emissions
- 12 years ago (2011-05-31)
- David Flin
India’s economic growth of 8-9 per cent/year has pushed it to No. 3 in the list of top global carbon polluters. As a result, the Indian government is looking into ways of curbing emissions growth, avoiding both the impacts of climate change on one hand and spiralling energy costs on the other.
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It has decided to develop two market-based trading schemes to encourage energy efficiency and green power across the country, sidestepping emissions trading schemes.
Srinivas Krishnaswamy, CEO of the green policy consultants Vasudha India, said: “The policy roadmap that India is adopting to curb emissions is innovative – something that will make industries look at making efficiency the centre-piece, rather than some step that follows an ineffective carrot and stick policy.”
In what is believed to be the world’s first such national market-based mechanism, called Perform, Achieve and Trade (PAT), India is starting a mandatory scheme that sets benchmark efficiency levels for 563 big polluters including power plants, steel mills and cement plants, that account for 54 percent of the country’s energy consumption. The scheme allows businesses using more energy than stipulated to buy tradable energy saving certificates (Escerts) from those using less energy, creating a market estimated by the government to be worth about $16 billion in 2014 when trading starts. The number of Escerts a company receives will depend on the amount of energy saved in a target year.
A three-year rollout phase is due to start in September. The government estimates that the scheme will help India curb about 100 million tonnes of carbon emissions. India has already introduced a Renewable Energy Certificate (REC) trading scheme for wind, solar and biomass power plants. Renewable power currently comprises about 8 percent of energy production in India, while coal is used to generate over 60 percent.
Trading for the REC scheme, which currently occurs once a month, has increased as more projects participate, underpinning a government plan to ramp up solar power from near zero to 20 GW by 2022. On May 25, a total of 14,002 RECs were traded during the REC trading session on the Indian Energy Exchange, valued at $4.6 million. This compares with 260 units at the previous session in April.
However, concerns remain about how both initiatives will evolve because of a lack of data and trained manpower as well as weak penalties for firms that refuse to comply.